[Guidance Overview]
IRS Issues Final Regulations Concerning the Use of Longevity Annuities in DC Plans
"A plan sponsor desiring to offer a QLAC as an optional form of benefit should consider its fiduciary obligations under [ERISA] ... In addition to fiduciary obligations concerning selection of a service provider, a plan sponsor should carefully consider how it educates plan participants about the annuity option so that it may avoid any potential liability that could arise in connection with giving investment advice."
(Troutman Sanders)
|
[Guidance Overview]
FATCA Compliance Update: IRS Releases Form W8-BEN-E Instructions (PDF)
"The IRS recently released instructions to Form W8-BEN-E, which non-US benefit plans qualifying for an exemption must provide to US withholding agents to avoid FATCA's 30% withholding on income from US sources. Unfortunately, the instructions contain little guidance specifically directed at benefit plans. Nevertheless, with FATCA withholding effective July 1, 2014, multinational employers should review these instructions as part of their continued assessment of non-US benefit plan FATCA compliance obligations."
(Buck Consultants)
|
Pension Smoothing Included in Highway Trust Fund Proposal
"Building on a similar feature of the MAP-21 highway bill passed in 2012, the House Ways and Means Committee proposal would allow corporations a range of rates for calculating defined benefit plan liabilities... The most generous funding calculation, which ended with 2012 plan years, would now be available to sponsors through 2017. The reduced pension funding contributions resulting from the change would bring in an estimated total of $6.4 billion in tax revenue, according to a [JCT] estimate ... Groups representing corporations also welcomed the absence of further premium increases for the [PBGC], which had been considered in earlier proposals."
(Pensions & Investments)
|
|
Qualified Plans Must Come to Terms with Death: Who Is the Beneficiary? (PDF)
"There are numerous federal requirements governing retirement plan distributions upon the death of a participant. There are also a few rules that give a plan sponsor some flexibility in the payment features it wishes to include. The determination of who receives a participant's death benefit falls into both camps with its share of legally required and discretionary provisions.... This article examines some of the key issues that qualified retirement plan sponsors should consider when reviewing and updating plan documents and administrative procedures to ensure compliance with current beneficiary designation rules."
(Milliman)
|
Tips for Fielding 'Lost Participant' Claims for Retirement Benefits
"[T]here seems to be a coming surge of 'missing participants' who are re-engaging with old benefits plans -- driven in large part by certain efforts at the Social Security Administration and the accelerating pace of Baby Boomer retirements.... Once a claim is filed, it becomes the sponsor's duty to review the claim and hand down a timely yes or no decision... Oftentimes it will turn out that the participant does, in fact, deserve a benefit. Or records will be found that indicate the individual was already paid out. Either way, ... it's all about process."
(planadviser)
|
The Perils of a Non-ERISA 403(b) Plan
"Under the current regulatory environment, the distinction between a non-ERISA and an ERISA 403(b) is becoming more obscure. Inadvertent or unintentional involvement by the employer can make the plan subject to ERISA. That means that non-profits run the risk of being penalized by the Department of Labor for breach of ERISA requirements. Just having that risk out there creates an unclear, unsure environment."
(Strategic Benefit Services)
|
|
Why All Plan Sponsors Should Use FINRA's Free BrokerCheck Service
"BrokerCheck will tell you: Whether there have been any customer complaints filed against your advisor; The status or resolution of these complaints; Whether your advisor has been disciplined for any reason; If your advisor violated any rules or regulations; Whether your advisor has been terminated for any violations; and If your advisor is currently under investigation by the [SEC] or FINRA."
(Lawton Retirement Plan Consultants)
|
Misconceptions About Fiduciary Roles of the Plan Administrator and Principal Fiduciary in a Retirement Plan
"There is a new breed of service provider arising in the marketplace that positions itself as an added layer between the employer and other service providers. Contrast that business model with that of a discretionary trustee, which chooses the investments rather than choosing a person to choose the investments. Or contrast it with the business model of a 'working' 3(16) administrator which not only accepts the fiduciary role but actually performs the administrative functions, rather than hiring a TPA. Both business models can be extremely helpful to an employer and both are valid."
(Pentegra Retirement Services)
|
No Gender Gap in IRA Contributions (PDF)
"[A]ccounts owned by males received only slightly higher average annual contributions ($4,023) than did those owned by females ($3,995), although males had higher individual average and median balances than females ($139,467 and $36,949 for males, respectively, vs. $81,700 and $25,969 for females), and were more likely to have an IRA."
(Employee Benefit Research Institute [EBRI])
|
Aon Hewitt 401(k) Index Observations, June 2014
"Trading activity in defined contribution plans in June ... [marked] the second lowest monthly level since Aon Hewitt began tracking this activity in 1997.... [P]articipants traded only 0.019% of their balances.... When trading occurred, plan participants slightly favored fixed income funds over equities.... After incorporating trading and market activity, participants' overall allocation to equities at the end of June stood at 65.5%, a marginal increase from 65.4% at the end of May."
(Aon Hewitt)
|
Corporate Pension Funded Status Improves in June by $14 Billion
"The funded status of the 100 largest corporate defined benefit pension plans increased by $14 billion during June ... The deficit fell to $252 billion from $266 billion at the end of May, due to investment gains. As of June 30, the funded ratio rose to 85.3%, up from 84.5% at the end of May. However, the funded ratio has still declined from 88.3% as of December 31, 2013."
(Milliman)
|
ERISA Compliance: Fiduciary Reliance on Registered Investment Advisers
"In addition to investment advice, RIAs should also be able to assist the plan sponsor in implementing best practices and developing strong governance processes that help ensure plan sponsors are meeting their other fiduciary responsibilities. This paper will briefly highlight why it is important to consider working with a RIA, and the evaluation criteria plan sponsors should use in their search for any consultant for their plan."
(Multnomah Group)
|
Missouri Bars Pension Advances for Public Employees
"Missouri's governor Jay Nixon on Tuesday signed a law that made it the first state to bar pension advances -- a practice wherein retirees are offered a lump sum in exchange for signing over all or part of their income stream -- for public workers.... [A recent GAO] investigation revealed that the effective interest rate on pension advances ranged from 27% to 46% -- two to three times higher than the legal usury rates set by states."
(InvestmentNews)
|
Why Healthier Retirees Reject 'Off-The-Shelf' Retirement and Seek to 'Do Something'
"We should keep in mind the changing demographics of retirement as more and more baby boomers enter their golden years.... Don't understate the need to 'do something,' especially for successful people.... For many, there remains a psychological drive to seek and obtain rewards. It's why gamification has become a popular motivational tool. It also explains why today's retirement is not your grandfather's retirement."
(Fiduciary News)
|
[Opinion]
The Art of Fiduciary Investing: Controlling the Controllable
"While excessive costs have been the focus of recent ERISA actions ... the next wave of ERISA litigation will focus on the failure of plan sponsors to provide the 'broad range' of investment options required under ERISA Section 404(c) in order to allow plan participants to effectively diversify their pension accounts so as to minimize the risk of significant investment losses.... [T]he investment options offered by most defined contribution plans consist of mainly of unnecessarily expensive and highly correlated equity-based mutual funds."
(The Prudent Investment Adviser Rules)
|
[Opinion]
Apply the Fiduciary Standard to Reduce the Number of Regulations, the Size of Government, and the Need for Wall Street Oversight
"[S]everal members of the U.S. Congress have urged the [DOL and SEC] ... to either slow down or stop their fiduciary rule-making efforts altogether. Often the reason expressed is concerns about the imposition of more government regulation, as well as reservations about the growth of the size of government. Yet, the contrary result is far more likely, as imposing bona fide fiduciary obligations will likely reduce both the number of government regulations and hold down the size of government. It will also foster the marketplace policing Wall Street, itself, thus substantially reducing the likelihood of the abuses which led to the financial crisis of 2008-9."
(Ron Rhoades)
|
[Opinion]
Understanding the Hidden Risks in Target Date Funds (PDF)
8 pages. Excerpt: "When well-intentioned, but misinformed trustees damage participants, restitution is warranted because trustees are fiduciaries who should know better. Here's a list of some of the risks: [1] Thinking that all Qualified Default Investment Alternatives (QDIAs) are prudent; [2] Accepting the investment objectives promoted by fund companies; [3] Trusting the big brands ... to do the right thing; [4] Believing that mutual fund companies are co-fiduciaries; [5] Agreeing that risk at the target date should be greater today than it was in 2008; [6] Accepting guidance that is just not correct, even though it's common; [7] Omitting a Statement of Investment Policy."
(Paladin Research & Registry)
|
[Opinion]
Text of Comments by Manning & Napier to SEC on Proposed Target Date Fund Disclosures (PDF)
"[We] do not support the Committee's recommendation that the Commission can or should identify a standard risk measurement or methodology for a risk-based glide path. In sum, we believe: [1] Managers should have the flexibility to communicate and illustrate their risk management approach in a way that is most representative of their unique investment process; [2] Risks are dynamic and change over time. No single risk measure can accurately predict or illustrate a manager's ability to deliver the risk that matters most to participants: failing to meet spending needs in retirement; and [3] Given the complexity of risk measures and the important role that plan fiduciaries play in selecting a plan's QDIA, discussions of risk should be approached differently for plan fiduciary and participant audiences."
(Manning & Napier)
|
Benefits in General; Executive Compensation
|
IRS Revenue Ruling Permits Deferred Comp Opportunities for U.S. Fund Managers of Offshore Hedge Funds
"The Ruling provides U.S. hedge fund managers with flexibility in structuring their compensation arrangements with offshore vehicles. For example, Options and SARs can be structured to lock a fund manager's incentive compensation into the value of the fund itself for a fixed number of years or upon the occurrence of certain events (e.g., the exiting of the investor) by agreeing in advance when the Options or SARs will be exercisable. By effectively allowing multi-year fee deferrals, the Ruling permits investors to better align their interests with the fund managers, without investors asking for a clawback of fees."
(Haynes and Boone, LLP)
|
Will Dodd-Frank Clawbacks Lead to Mandatory Deferrals of Incentive Compensation?
"If a deferred, vested bonus is scheduled to be paid at a fixed date, could a forfeiture of that deferral to satisfy a clawback of the bonus be deemed a prohibited acceleration under 409A? We would hope this rule would not apply because this is a forfeiture of an item of deferred compensation rather than an early payment subject to the prohibited-acceleration rule. The outcome may be less certain if a deferred bonus is forfeited at least in part to satisfy a clawback of other compensation (e.g., equity gains)."
(Towers Watson)
|
The Benefits Federal Employees Love Most
"The good news for federal employees is the things that are most important to them -- [the Thrift Savings Plan and the health and wellness programs under the Federal Employees Health Benefits Program], as well as the Federal Employees' Group Life Insurance Program -- are increasingly meeting their needs. The bad news: Fewer respondents in 2013 said other benefits were satisfactory compared to 2004."
(Government Executive)
|
Press Releases
|
|
|
|
|